Data and Research February 4, 2019

Average Americans Really Don’t Understand 401(k)s and Financial Terminology

Questions about tax rules, 401(k) basics and financial terminology account for about 63% of the questions Dream Forward’s AI chatbox receives.

Reported by

Dream Forward, a provider of turnkey 401(k) and 403(b) plans for small and medium-sized businesses and nonprofits, says one of the most interesting revelations from exploring data from its AI chatbox for participants is the number of questions about understanding 401(k)s and financial terminology.

The company grouped the questions into five key themes:

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  • Understanding the benefit – Questions like, “How much do I need to save to get a match?” or “How do I get money from my employer?”
  • Understanding how retirement accounts work – Questions like, “How does my money get from my paycheck into this account?”
  • Understanding tax consequences – Questions like, “How does this impact my taxes?”
  • Juggling multiple financial priorities – Americans are concerned that they can’t save for retirement due to other financial pressures, such as student loans, the need to replace an aging car, credit card debt, etc.
  • Investing-related questions – Participants will ask questions as they explore the list of investment options available in their 401(k) plans.

Questions about tax rules, 401(k) basics and financial terminology account for about 63% of the questions the firm’s AI chatbox receives. Questions about 401(k) basics rank No. 1, with more than 30% of questions about that topic, followed by financial planning, which makes up more than 20% of questions received.

Dream Forward has also created a Confusion Index based on reactions to answers to questions in the AI chatbox and how much interaction it takes to get the participant to feel comfortable. Looking at the Confusion Index, the firm found the topic about which participants struggle the most is understanding withdrawal options. “Comprehending the differences between in-service withdrawals, 401(k) loans, early withdrawal tax penalties, hardship withdrawals, in-kind distributions, etc. is a challenge,” the firm says.

According to Dream Forward, overly complex retirement plans reduce participant engagement.

More information is in Dream Forward’s Retirement 2058 white paper, which may be downloaded from 
 http://dreamforward.io/download-retirement2058-whitepaper.
Products February 4, 2019

401(k) and 403(b) Plan Provider Offers AI Chatbox for Participants

Dream Forward’s AI chatbox uses conversational interaction to address participants’ retirement plan and financial wellness questions.

Reported by

Dream Forward, a provider of turnkey 401(k) and 403(b) plans for small and medium-sized businesses and nonprofits, has built what it says is the first conversational artificial intelligence (AI) chatbox to address plan participant questions.

To a plan participant, the AI chatbox looks like an online chat with customer service. The 24/7 chat support offers employees easy-to-understand answers to their questions and concerns.

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The AI is able to recognize the true meaning behind participant questions such as, “What happens if I get hit by a bus?” for example, by directing participants to set up beneficiary designations. “We’ve built an AI that goes beyond simple keyword matching and instead uses context to support different types of retirement plans and varying levels of user sophistication,” the firm says.

Retirement plan sponsors can customize the AI chatbox by deciding when HR or benefits teams get looped in on specific employee questions.

In addition to helping participants understand their retirement plans, the AI chatbox addresses other financial challenges participants face. For example, if a participant tells the chatbox he cannot save for retirement because he needs to save for his child’s college education first, the chatbox would respond, “Think of it this way. Your child can always get student loans. No one is going to give you a loan for your retirement. Your child could end up having to support you for 20-30 years in your old age because you didn’t save enough for retirement. Make sure your children thrive in adulthood by saving for retirement. It’s actually a much higher priority than you might think.”

According to Dream Forward, it is unrealistic to assume that the average participant will take the time to go through a long online calculator that maps out competing financial priorities. “Over the course of our internal product development and testing, we’ve learned that conversational chat interaction is more effective at getting lower- and middle-income Americans to save for retirement,” the firm says.

More information about Dream Forward’s services may be obtained from http://dreamforward.io/for-businesses/.

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